Rivian Automotive is expected to report a positive gross profit as part of fourth-quarter earnings Feb. 20, despite mostly flat deliveries.

The young automaker has been burning through billions of dollars a year since launching its first vehicle in late 2021, but has stood by its early 2024 forecast that revenue will exceed material and labor costs in the final quarter of the year.

Rivian implemented an extensive cost-cutting program last year, but also suffered from a major parts shortage that affected electric motor production, the automaker said.

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Wall Street analysts have been watching closely to see whether the company can achieve positive gross profit, considered a key milestone on the road to future net profit.

Fourth-quarter deliveries rose just 1.5 percent to 14,183 vehicles, the automaker reported in January. Rivian makes the R1T pickup, R1S crossover and electric vans for Amazon but doesn’t break out sales by model.

The company was plagued by a parts shortage during the October-December quarter, causing production to fall 27 percent to 12,727 vehicles, the company said.

Despite the supplier issues, Rivian executives reiterated in November their forecast for a positive gross profit in the fourth quarter. Rivian posted a gross profit loss of $392 million in the third quarter, losing $39,130 for each vehicle delivered.

“We expect to have a modest [generally accepted accounting principles] gross profit in the fourth quarter of 2024,” Rivian CFO Claire McDonough said on November’s third-quarter earnings call.

McDonough said the gross profit would be driven by non-vehicle revenue such as regulatory credits, along with higher average prices and lower material costs per vehicle.

Rivian sells regulatory credits to other automakers to help them meet emissions standards. The company has not forecast when it might post a net profit. In the third quarter, it reported a net loss of $1.1 billion.

For full-year 2024, the Irvine, Calif., automaker saw its U.S. registrations grow modestly compared with a year earlier, according to data from S&P Global Mobility.

Rivian’s registrations rose 4.5 percent last year, led by an 11 percent increase for the R1S, S&P Global Mobility said. Registrations for its EDV vans rose 6.3 percent last year but fell 13 percent for the R1T. Since Rivian doesn’t report sales by model, registration data serves as a proxy.

Preparing for growth

The automaker is building a new assembly line at its Normal, Ill., factory for a midsize crossover, the R2, with a starting price around $45,000. It’s expected to launch next year and help the company scale production and reduce costs.

The bigger R1S starts at $77,700 with shipping and the R1T starts at $71,700 with shipping, according to Rivian’s webpage.

Rivian is also building a second factory near Atlanta for additional R2 capacity and for another crossover, the R3.

Rivian CEO RJ Scaringe has said the R3 will have a lower sticker price than the R2 but hasn’t offered specifics. The Georgia factory is expected to open in 2028.

Separately, Rivian finalized a $5.8 billion joint venture agreement with Volkswagen Group late last year. Rivian’s electrical architecture and software will be integrated into vehicles from VW brands, the companies have said.

Wall Street firm Bernstein said in a Feb. 12 research note that it expects Rivian to continue burning through billions of dollars because of sales challenges and competition from other EV makers.

“Without significant volume expansion, Rivian will remain subscale and achieve mid-teens gross margins at best — a prospect that makes it challenging to deliver meaningful value to shareholders,” Bernstein said. The firm rated Rivian stock at “underperform” with a target price of $6.10

Rivian’s stock price closed Feb. 18 at $14.44 for a gain of 9 percent since Jan. 1.